Politicians talk about doing budget cuts with care - using the proverbial scalpel rather than a meat cleaver. But rarely are tax increases discussed in the same context.

Monday

Nov 16, 2009 at 12:01 AMNov 16, 2009 at 5:00 PM

John D. Montgomery/Hutchinson News editorial board

In Kansas politics, tax increases generally have been a taboo subject. We just aren't going to go there.

And yet, as with spending cuts, there are ways to increase tax revenue without doing damage to the state's economy, which is always the great fear. Kansas, in fact, is nearing a point of being forced to consider tax increases.

Some Kansas legislators are beginning to broach the subject. A tax increase wouldn't take the form of a general hike in income or property taxes. Rather, the consideration is being given to eliminating exemptions on the sales tax and on rolling back some of the tax breaks the Legislators passed starting in the 1990s, when economic conditions allowed it.

Eliminating sales tax exemptions is not a new idea. The late Gov. Joan Finney campaigned on that idea in 1990. But it never has gained much traction. In fact, the Legislature only has added to the list of exemptions.

If the state needs revenue enhancement - which, of course, it does - this is a good place to look. It is a way to increase taxes without setting back economic recovery.

Assuming that recovery depends on consumer spending, everyone must remember that most retail consumer goods - cars, clothes, electronics - already are taxed at sale, so we're not going to curtail spending there. What we are talking about is services, such as attorneys and accountants, utilities, prescription drugs and the like.

Eliminating some of the exemptions, such as on utilities and prescription drugs, could be a hardship on Kansans who are struggling the most with basic life necessities. But, if that was the purpose of these exemptions, then we should have exempted food, too.

Eliminating many, if not most, of these sales tax exemptions would not hurt economic recovery. And the most radical approach - eliminating all of the exemptions - is something Fort Hays State University President Ed Hammond thinks would allow the state to lower the overall sales tax rate and eliminate the corporate income tax.

We don't know if we would go that far, but the point is that taxes could be increased and at the same time restructured to be more effective.

It is important to review tax breaks from time to time anyway. The purpose lawmakers had at one time for enacting a tax break may have no relevancy now, years later, or may have proven ineffective. State tax code, like the federal, probably has all kinds of exemptions that have been there for years but make little sense today.

Exemptions exist not only in the sales tax. They are sprinkled around in the form of various exemptions, deductions, credits and rebates across income and property taxes, too.

It is time to review them all, with of course the same due care given to spending cuts.

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